“Swathes of stop-loss buying ... accompanied by flow from macro hedge funds as well as some official/sovereign wealth fund types, accounts for much of the subsequent price action," he told clients.

And the implications could go beyond the dollar, Mr Attrill warned.

“We should not underestimate the significance of the rangebreak on the AUD/USD for other local markets.

“In particular, to the extent that persistent currency strength was one motive for this week’s RBA rate cut, then were the currency to maintain its new-found downward momentum this could remove almost at a stroke one incentive for the RBA to follow up this week’s move anytime soon," he said.

Looking towards parity

Bank of New Zealand currency strategist Mike Jones said the dollar’s move shows “currency markets have certainly exploded into life".

“Investors have bought the US dollar with gay abandon and the Aussie dollar has been caught up in that; it’s copped an absolute hiding."

Mr Jones said the dollar could move below parity with the US dollar as early as Friday night.